Maersk announces September GRI for eastbound transpacific

Tuesday, July 23, 2013

Maersk Line said it will implement a general rate increase (GRI) for dry and reefer shipments from the Far East to the United States on September 1. Rates will increase by $400 to the U.S. West Coast and $600 to the U.S. East Coast per standard 40-foot container. Additional information on scope and other size containers is available here.
Maersk's announcement of a September GRI follows a similar July 1 $400/$600 GRI by members of the Transpacific Stabilization Agreement, of which Maersk is a member.
The TSA also announced this month that its 15 members are planning a $400 peak-season surcharge per 40-foot container from Asia to all U.S. destinations, effective August 1.
Meanwhile, the London-based consultants Drewry said its research shows "carriers were successful in lifting spot rates on both the main headhaul East-West trades with their GRI attempts in the first week of July. This followed a month of tumbling pricing across many key trades."
However, on Friday, the Shanghai Container Freight Index fell on all of the major East-West trade routes: Shanghai to North Europe, and the Mediterranean and Shanghai to the U.S. West and East coasts.
Clarkson, in its Clarkson Box Clever Weekly Report, said that "once again, the index has seen Asia/Europe and Asia/Med rates eroded; we seem to be in all too familiar territory, with weak fundamentals taking their inevitable toll on rates."
"Whilst there is broad expectance that the August rate increase will go through, longevity as ever will be the key. With this spike/decline in rates becoming ever more disruptive (and predictable), an approach toward restructuring deployed capacity seems to be in everyone's best interest," the shipbroker said.
Drewry added that North-South pricing on intra-regional lanes is falling on rising ship deliveries, cascading capacity from East-West lanes.
In a commentary on shipping, the brokerage firm Jefferies added that spot rates have declined, but that it expects some freight-rate increases stemming from August 1 GRI.
Jefferies said it was maintaining a "cautious stance on the space as the FY13 and FY14 results could come substantially below consensus estimates."
It said its research suggests "shipping space is generally tight for services to North Europe but less so for Mediterranean and the U.S., which means the August 1 GRI may have a better chance of being implemented in North European trade than others.
"Further volume pick-up is unlikely in the near term to sustain spot freight rates," it continued. "First, we may be able to rule out any meaningful re-stocking. The inventory-to-sales level in the U.S. is at a 4-year high. The European countries’ inventory to sales ratio is at about the historical trend line."
"The long-term trend of container volume growth is slowing, in our view," Jeffries said. It added that "container volume could grow slower than global GDP as in-sourcing and near-sourcing pick up pace."
Drewry's Global Freight Rate Index, a weighted average across all main trades excluding intra-Asia, recorded its fifth consecutive month of declines in June, to post a 5-percent, month-on-month fall to $1,783 per 40 foot container. It said the index has now reached its lowest level since September 2009, at the depths of the last worldwide recession.
"Hitherto buoyant trade of Far East Asia to Oceania witnessed notable freight rate erosion in June," said Drewry, noting its South China-Australia Freight Rate Benchmark fell 16 percent in May to $1,930 per 40 foot, its lowest level since July 2012. "This is the latest trade to fall victim to the cascading of larger ships onto once fast growing routes, in order to reduce the capacity burden on over tonnaged East-West trades."
Pricing also retreated on trades covering the eastbound transpacific and both legs of the Asia-Europe trade, as well as imports into South Asia, Middle East, South America, Africa and Oceania. Rates on intra-Asia trades fell to their lowest level since March 2011, according to Drewry’s Intra-Asia Freight Rate Index. Trades experiencing rising rates were few and far between, but pricing from Far East Asia into South Asia recovered in June, as did exports from Africa. - Chris Dupin